Protagonist Therapeutics, Inc Commitments Disclosure

Note 9. Commitments and Contingencies

Contract Service Providers

In the normal course of business, the Company enters into agreements with contract service providers to assist in the performance of its research and development activities and clinical and commercial manufacturing activities. Subject to the required notice periods and the Company’s obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time. However, the financial terms of some of these agreements may include non-refundable upfront payments, payments by the Company for options to acquire certain rights, contingent obligations by the Company for potential development and regulatory milestone payments and/or sales-based milestone payments and royalty payments. These obligations are recorded in the Company’s consolidated statements of operations as incurred, which is generally when the corresponding events become probable. Certain payments are contingent upon the occurrence of various future events that have a high degree of uncertainty. The Company expects to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources.

Indemnification Agreements

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by law. The Company carries a directors’ and officers’ insurance policy. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to the indemnification agreements. The Company believes that the fair value of these indemnification agreements is minimal and has not accrued any amounts for the obligations.

Zealand License and Collaboration Agreement

In January 2020, the Company initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce against Zealand related to a collaboration agreement the Company and Zealand

entered into in 2012 and terminated in 2014. In August 2021, the Company and Zealand agreed to resolve the dispute and reached an Arbitration Resolution Agreement. Under the Arbitration Resolution Agreement, the Company is obligated to pay Zealand certain milestone and royalty payments for rusfertide. The potential future payments include (i) up to $2.75 million in future development milestone payments, (ii) a 1% royalty on worldwide net sales, and (iii) sales milestones for achievement of annual net sales amounts in specific geographies.

The Company considered the outcome of these arbitration proceedings as being related to its research and development projects; therefore, payments or milestone payments were recorded as research and development expenses.

Legal Proceedings

The Company recognizes accruals for legal actions to the extent that it concludes that a loss is both probable and reasonably estimable. The Company accrues for the best estimate of a loss within a range; however, if no estimate in the range is better than any other, it accrues the minimum amount in the range. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, it discloses the possible loss.